The MHC Blog

Powerful Business Insights for Succesful Leaders

Why you need to know your numbers

It’s been an interesting year in the life of politics. Anyone following the US or UK political scene may agree with me, it sometimes feels like your watching a comedy programme, never has the political section of the evening news held my attention so closely – I ask myself daily “I wonder what have they been up to today?!”

My interest was held very closely with the recent 2 interviews with Diane Abbot. You don’t need to know which UK party she is representing (Labour), or her job title (Shadow Home Secretary), just that during a key election time where she is being interviewed nonstop to convince the public of the credibility of her party, she wasn’t able to have an accurate discussion on key numbers.

It's not that she didn’t know them, she stumbled so badly, tripping over the numbers when questioned, contradicted herself, allowing the media interviewer to show that knew more than she did and finally dented potentially the credibility of her party.

Why would the public vote for a political party when it appears that they no grasp of the numbers that they are arguing on – she has created a halo effect, lumping all her peers into the same “confused on the key numbers” that all elections are won and lost over so that all her peers appear to be facing challenging interviews with the media keen to trip everyone by being more financially aware than the politician whose job it is to know this stuff.

In business, we can learn a lot from these examples, it’s extremely important that business owners not only know their numbers, but plan their business strategy around them. Why?

Business credibility – as business consultants, during our first meetings with a potential client the first questions we ask about are the Company financials – we need to know that the Company has the basics in place to monitor spend and most important of all, the owner of the business has a clear understanding of the financials of their business. Small Business owners potentially outsource the Company accounting, this shouldn’t mean that they operate a hands-off approach to the financial running of their Company, they need to know how the year is panning out, the forecast for the following 12 months and how financially secure their Company is.

Business knowledge – Owners that can discuss the financials of their business show they are committed and have a good grasp of the Company future pipeline, and are aware of the financial health of the business. Just because there is money in the bank today doesn’t mean that there will be tomorrow. How is business development working? When are deals going to close? When do you need to be aware of a problem down the line? Business owners need to have their fingers in many pies of their business and a good overview of how business is being won, the conversion rate of their pipeline, and how well business that has been won is being implemented. By checking the Company bank account every day and the reviewing the Company financial forecast, they can quickly pick up on issues, correcting these before they become an issue. Often invoices do not get issued or followed up for payment – Company can be very focused on the doing that they forget to keep an eye on the administration that goes behind the scenes.

Employee confidence – The business owner needs to know more about the financial health of the Company than their Employees. Unfortunately, we are currently in a situation where companies are struggling financially, Employees need to have confidence in the leadership of the Company to decide to stay or leave. In a time where retention of the A Players of your organisation is imperative so that the Company can focus on keeping their powder dry to see this current situation through. Leaders need to be open with the numbers, but in doing this they need to be able to discuss the financials in a way that shows clear understanding and keeps the team focused on survival and business growth.

At time of writing, its unknown how damaging Diane’s mishaps have been to her political party, and should Labour fail to be elected this will not be down to just these 2 interviews. However, I believe her mistakes are a public lesson in how to do things wrong, how others perceive your abilities and how easy it can be to knock down the credibility of a Company and your management style.

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A Business Growth and HR Strategist helping medium size companies to Scale Up using proven systems.
Claire is an MCIPD qualified Human Resource professional, with 25+ years’ experience working within various industries and 10 + years’ experience of HR practices throughout the Middle East. As a HR Generalist she has held a number of senior and Board level HR positions. She is experienced in working at both strategic and tactical levels.